Money management is not a one-time event. It is a lifelong journey that moves through different stages. Each stage of life comes with its own financial responsibilities, opportunities, and risks. To build lasting wealth, one must understand these stages and align their strategies with the right balance of risk and return. In simple terms, risk is the uncertainty of investment outcomes, while return is the reward for taking that risk. Managing this relationship wisely is the backbone of financial success.

In this article, we will explore the three main financial stages; Accumulation, Consolidation, and Spending/Gifting and explain how risk and returns play out in each.

1. The Accumulation Phase

This phase begins in early to middle years of working career. It is the stage where you are laying the foundation of your financial life. During this period, most people are focused on career development, increasing their income, and building assets. It is also the time when major financial obligations, such as paying student loans, purchasing a home, or starting a family, begin to emerge.

The key financial objective in this phase is growth. Because you are young and have time on your side, you can take on higher risks in pursuit of higher returns. Even if markets decline or investments underperform in the short term, you still have time to recover and benefit from compounding.

For Zambians, this could mean contributing consistently to your NAPSA savings or an insurance retirement policy, investing in Treasury bonds offered by the Bank of Zambia, venturing into long-term assets such as real estate, or taking advantage of the Lusaka Securities Exchange (LuSE) by buying shares in listed companies. These investments may fluctuate in value, but the long-term growth potential is significant.

Lastly, the accumulation phase is about building aggressively. The risks are higher, but so are the rewards if you stay disciplined.

2. The Consolidation Phase

The consolidation phase usually spans from past midpoint of careers. At this point, you have likely reached your peak earning years, paid off significant debts, and accumulated assets over time. Retirement is no longer a distant thought, so your focus shifts from aggressive growth to preserving wealth while still allowing modest growth.

Risk tolerance naturally decreases in this stage because the closer you get to retirement, the less time you have to recover from potential financial losses. Instead of chasing high-risk investments, you balance your portfolio by shifting more funds into stable, income-generating assets.

For example, a Zambian in this stage may decide to reduce exposure to volatile shares on LuSE and increase holdings in government bonds or fixed deposit accounts with commercial banks. Real estate investments may shift from speculative land purchases to income-generating properties, such as rental houses or commercial shops. This provides a steady cash flow while reducing exposure to market shocks.

The consolidation phase is also the time to strengthen your retirement planning. Contributions to private pension schemes, employer pension funds, or diversified investment funds become a priority. The aim is to protect the wealth you have accumulated so that it serves you well when you stop working.

3. The Spending & Gifting Stage

The final stage in the financial journey is the Spending and Gifting Stage, which takes place after retirement. At this point, you are no longer actively working to earn income, but instead relying on the wealth you built in your earlier years. This stage involves two major aspects. The first is spending, where you draw from your pensions, retirement savings, and investment income to cover daily expenses, healthcare needs, and to maintain your lifestyle. The second is gifting, which is the process of transferring wealth to your children, grandchildren, or to charitable causes.

The focus during this stage is on security, sustainability, and legacy. The appetite for risk is very low because the primary goal is to preserve capital while ensuring a steady flow of income. Investments are typically concentrated in low-risk assets such as government bonds, annuities, and conservative funds that provide predictable returns. In Zambia, many retirees rely on income from NAPSA pensions, employer pension schemes, and rental properties to sustain themselves. At the same time, it is common to pass on wealth in the form of land, livestock, or small businesses to family members.

Estate planning becomes especially important in this phase. Having a valid will or creating a trust ensures that assets are transferred smoothly without conflict. In this way, the spending and gifting stage is not just about enjoying the fruits of your hard work, but also about securing your family’s future and leaving behind a meaningful legacy.

The financial journey can be compared to climbing a mountain. In the early years, you climb quickly and take risks to get as high as possible. As you approach the summit, you slow down, steady your footing, and focus on balance. Finally, on the way down, you carefully preserve your energy, enjoy the view, and hand over your achievements to others.

Understanding these stages and how risk and returns change across them allows you to make smarter financial decisions. In Zambia, where financial literacy is still developing, this knowledge is a powerful tool that can help individuals build sustainable wealth and secure their legacies. At the end of the day, wealth is not just about how much you make but how wisely you manage it throughout your life.

-Emmaria, Founder of NdalamaLens